Important Considerations when Buying WA Strata Units off the Plan

By HOUSPECT WA Building Inspections|July 13, 2018

1. Your New Strata UnitWhen you have purchased your strata unit off the plan you will often only be given one opportunity to view the unit prior to handover. This will normally be at the pre settlement inspection. The limited access to the property during the construction period is hardly surprising given the site is likely to be commercial construction site with extensive access restrictions and safety requirements.So the pre settlement inspection is a key inspection and it is important that you take up the opportunity, some buyers don’t! A Building Inspector can assist you during this inspection by assisting you to review the construction and installation quality of the final finishes throughout your unit inclusive of the installed items such as doors, windows, fittings, shower screens, tiling etc. Remember, if some of the issues are not identified pre handover, the opportunity to have them remediated can be lost.

Prior to undertaking this inspection it is critical that you review the strata plan so that you can determine where your Lot boundaries are. These can be very different between Strata developments but often, in a multi storey strata development, the strata Lot boundaries are generally the surfaces of floors, walls and ceilings of the strata unit, balcony, storeroom and carport/car bay. The strata Lot owner also owns a share of the balance of the entire common property for the strata complex.

So you can imagine in a complex of say 50 – 100 strata Lots pre settlement, the owners of each of the units all want to inspect their new units and ensure the finish is as they would expect. Builders often conduct these inspections with military precision within strict time frames, given the volume of inspections required. The key issue here is that what defects buyers find in their new unit can vary wildly between builders/developers. In some instances the units are near perfect with very little remediation work to be undertaken pre settlement. In other cases, the pre settlement inspection can identify a long list of incomplete works or construction defects which need to be addressed.

It is important that any defects or issues identified pre settlement/handover are documented and acknowledged by the builder as some of these items may be disputed post-handover as being damage associated with occupancy as opposed to a construction defect. For example, scratches on walls, windows or window frames identified prior to handover would clearly fall into a construction defect category, but post-handover there is the potential that they could fall into the category of occupancy damage.

2. Who is looking at the Common Property? The challenge with many new Strata developments is that the Lot owners are all focused on the construction and final finishes within their strata Lot property and there is often not a true independent review of the biggest asset in the strata complex – the common property. Remember, Lot owners will generally only own the inner surfaces of their Strata property boundaries. Essentially everything else is common property.

Pre Settlement, the Developer of the complex is basically the owner and controlling party of the strata company. The extent that the Developer will require an independent review of the construction defects and flaws in the final finishes of the common property can vary substantially. While Building Surveyors are employed by the Builder as a component of securing occupancy certificates, these reviews are often focused solely at BCA compliance and may not consider a myriad of issues including final finishes. We have seen some building Surveyors argue extensively that key Australian Standards simply do not apply unless they are a core component of the BCA . The net effect is it this can be left to the new strata Lot owners, via their strata company to review the construction of the common areas and progress these against the Builder via the WA Building Commission or State Administrative Tribunal. Given the sequence of events these critical inspections are almost never going to occur pre settlement and hence need to be undertaken during the maintenance period or during the statutory defect liability period, which extends out six years form the date of practical completion advised to the local council by the Builder.

It is generally beneficial to conduct defect liability inspections within the contractual defect liability period (or maintenance period) so that any remediation work can be undertaken as a matter of priority and before any secondary damage occurs. It is also important that maintenance contracts be established for all plant and equipment (electrical, mechanical and hydraulic) and that the suppliers confirm that all items are fully operational and have been installed as per manufactures requirements so as to ensure that any warranty entitlements can be retained.

SummaryIt would be very rare you would build a new home and not conduct at least one inspection prior to handover, let alone throughout the entire construction. The same applies to buying a strata Lot off the plan. However, in addition to inspecting the individual strata Lot property, consideration needs to be given to having the entire common property of the strata plan inspected. Remember every Lot owner owns a share of the common property. This inspection tends to be a specialist role which is not undertaken by the individual strata Lot Owners but a professional and independent building inspector. The challenge being, rarely is there any allowance in the initial Strata Company annual operating budgets to pay for such an inspection. The problem is that these important inspections tend to be overlooked or deferred until a significant issue emerges or becomes visibility apparent.If you are buying into a new development or buying off the plan, make sure your due diligence enquiries includes the question as to who has done or will do the defect liability inspection on the common property and has this cost been allowed for in the initial operating budgets of the strata company. You might be surprised by the answer.

By obtaining building inspections and including the reports as special conditions on an Offer and Acceptance contract, new buyers can protect themselves from unexpected financial burdens as the result of property damage, illegal building liabilities and o

If residential building work valued over $20,000 is to be undertaken (a WA Registered Builder is required) the Act requires that a builder take out home indemnity insurance in the name of the owner before accepting payment or commencing work.